Consumer staples stocks are supposed to be a safe haven, but investors have found little shelter in the sector thus far in 2014. The Consumer Staples SPDR (XLP) has fallen 6.7% since the start of the year, underperforming the -5.2% return of the SPDR S&P 500 ETF (SPY). This isn’t the way things are supposed to go for a sector that’s expected to have defensive characteristics when market conditions get rough.
At this stage, however, the consumer staples sector has begun to look more attractive than it has in more than a year — a potential gift for those looking for lower-risk ways to invest in stocks. Investors need to be selective in the staples group, since certain stocks — especially PepsiCo (PEP), General Mills (GIS) and Procter & Gamble (PG) — continue to exhibit vulnerable chart patterns. Nevertheless, the recent downturn means it’s time to put this sector back on your radar screen.